FEBRUARY 2007 BAD FAITH CASES JURY MAY CONSIDER ENTIRE COURSE OF CONDUCT OF INSURER IN DETERMINING BAD FAITH (Western District)

In Barry v. Ohio Casualty Group, the parties brought cross-motions for summary judgment on the existence of bad faith.  The insurer had eventually paid full underinsured motorist benefits (“UIM”) after the insured exhausted the payments from the tortfeasor’s policy.  However, the insured claimed bad faith based on an alleged dilatory course of conduct in handling the claim.  The alleged bad faith included the failure to conduct an adequate investigation, engaging in low-ball tactics throughout the claims handling process, attempting to raise a causation defense that was frivolous, and engaging in delay tactics.  It was also alleged that the insurer’s legal counsel engaged in improper conduct, and that this conduct should be considered part of the broader bad faith inquiry.  The conduct underlying the insured’s claims also included not questioning the reasonableness or necessity for medical treatments paid for under the policy for a period of three years, requesting that the insured provide a settlement demand package when no provision in the policy required it, not requesting a statement under oath, not seeking to obtain copies of the insured’s medical records or work history, and offering an initial settlement amount of $6,000.00, which increased to $25,000.00 in a two week period. 

The court noted that the insured plaintiff brought her claims in tort pursuant to 42 PA. C.S. § 8371, and that she alleged that an entire course of conduct constituted bad faith, rather than a particular incident or a denial of a claim.  However, since the majority of Pennsylvania cases applying § 8371 address situations where a claim is denied, the court found it unsettled as to whether the Pennsylvania Supreme Court would parse through the detailed fact pattern and distinguish between those actions that could demonstrate bad faith versus those that could not, or whether it would allow the factfinder to consider the entire course of conduct.  The court held that the Pennsylvania Supreme Court would likely hold that the entire course of conduct can be considered by the jury, noting that this is the majority view of the other jurisdictions recognizing the tort of bad faith.  Therefore, the court denied both motions for summary judgment.

Date of Decision: January 12, 2007

Barry v. Ohio Casualty Group, United States District Court for the Western District of Pennsylvania, No. 03:04-188, 2007 U.S. Dist. LEXIS 2684 (W.D. Pa. 2007) (Gibson, J.)